What is the relationship between supply and demand in economics?

Supply and demand are two fundamental concepts in economics that describe how the market works. In economics, supply refers to the amount of a particular good or service that producers are willing and able to sell at a given price, while demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price. The relationship between supply and demand is a fundamental principle of economics.

In general, when the demand for a product or service is high, but the supply is low, the price of that product or service will rise. Conversely, when the supply of a product or service is high, but the demand is low, the price will fall. This is because when demand is high and supply is low, there is a shortage of the product or service, and producers can charge a higher price. Similarly, when demand is low and supply is high, there is a surplus of the product or service, and producers will lower the price to try to attract buyers.

The price of a good or service is determined by the interaction between supply and demand. The point at which the supply and demand curves intersect is known as the equilibrium price, and it represents the price at which the quantity of the good or service supplied is equal to the quantity of the good or service demanded.